Obama’s Proposed Carried Interest Tax Potentially ‘Devastating’ for Multifamily
- Sep 13, 2011
Washington, D.C.—Could job creation come at the expense of multifamily owners? On Monday, the Obama administration proposed a $447 billion package for increased employment. This package suggests a tax increase on carried interest in order to raise revenue.
Though carried interest on private equity is considered by some to essentially be wages, which therefore could be taxed, others, especially those in the multifamily industry are strongly opposed to the carried interest tax.
“The apartment industry supports sound economic policy that helps restore job growth, but a tax increase on carried interest is bad for our economy and bad for our housing supply,” Cindy Vosper Chetti, National Multi Housing Council/National Apartment Association (NAA) senior vice president for government affairs said in a statement.
The carried interest tax, according to the NMHC and the NAA, will increase the cost of producing new housing as well as decreasing the supply by rendering deals financially unworkable. Additionally, the industry fears it could affect whether a new development is financially viable, and could affect proposed new affordable housing from being built. In 2010, the U.S. Conference of Mayors and the National Association of Counties opposed carried interest tax on the real estate industry for those reasons.
And, ironically, the tax, which plays a large part in real estate partnerships, could end up eliminating employment opportunities.
“It would be devastating to the production of multifamily,” Matthew Berger, vice president of tax, NMHC, tells MHN. “And, by extension, job creation.”
Note from the editor: Read more about the proposed carried interest tax here.